Thank you for inviting me to speak. It’s a pleasure to be here.

You meet during a very difficult time and the challenges you face should not be underestimated. 

The fortunes of the New Zealand economy are bound up with the fortunes of the building sector.  When you are prospering we know New Zealand must be too.  But of course the reverse is also true as recent experience has shown.

The building and construction sector is a key part of the economy.

These are difficult and challenging times for the building and construction sector – in fact for all of us.

The building and construction sector is important to the New Zealand economy.  It contributes more than 5 per cent of GDP, and employs 7.5% of our workforce.  The total capital spend in the building and construction sector is more than $20 billion per annum.  It can play a pivotal part in lifting us out of the recession.

We need to continue to invest in skills and capability and we need to lift productivity.  It’s important the sector retain critical mass and skills to be able to respond quickly and efficiently to the upswing in demand when it comes.

As you know the housing market has corrected, and is likely to continue to do so for a while yet.  The commercial sector is adjusting now.   But demand will return to the market.  We need to be ready when it does.

The current outlook still isn’t good, though the latest figures show that there may be a glimmer of light at the end of the tunnel.

Building consent figures

The trend for the number of new housing units authorised, excluding apartment units, has continued to fall since June 2007.

Applications have fallen more than 50 per cent since June 2007, and are currently at their lowest level since records began 17 years ago. 

The seasonally adjusted number of new housing units authorised, excluding apartments, rose 0.3 percent in February 2009, but remains at a low level.

In February 2009, there were 1,059 new housing units authorised, including 193 apartment units. 

In February, the value of consents issued for residential buildings was below the value of consents issued for non-residential buildings.

We can’t yet say the recovery has started, but the Government isn’t waiting for it to begin. It’s taking action now.

Boosting the economy with investment in infrastructure

The Government has fast tracked $500 million worth of publicly-funded building projects in the latest in a series of initiatives under the Government’s Jobs and Growth Plan.

About $100 million worth of fast-tracked projects will start before June 30 this year.

The $483.7 million spending brought forward includes:

• Education – $216.7 million of spending, including five new schools, school refurbishments and maintenance and ICT infrastructure improvements.


• Transport – $142.5 million of spending, spanning five large state highway projects and a programme of smaller, regional roading improvement projects.


• Housing – $124.5 million of spending, allowing Housing New Zealand to upgrade and renovate 10,000 more state houses, and build 69 new state houses over the next six months.

The Government’s economic stimulus package also includes:

• A $480 million helping hand of tax and regulatory assistance for small and medium businesses;


• Sweeping reforms of the RMA; and


• Income tax cuts

The way ahead

Right now, it could seem like there is not much light at the end of the tunnel.

But we must start looking further ahead. 

I want the building industry not only to weather the current economic climate, but to emerge stronger and in good shape to take advantage of the new opportunities that will return once the recovery begins.

We can achieve this by taking the necessary action now.

Building Act

As Minister for Building and Construction, I am simplifying and streamlining building regulations wherever I can.

This will require changes to the Building Act and work has already begun identifying where improvements can be made without compromising building quality.

One of my priorities is of course licensing.

Licensing

My focus is to lift performance and skill levels across the sector. 

A relatively low skill level in the sector has been holding the industry back and will continue to do so unless action is taken.

There is a risk that this situation will be made worse by the down-turn. That is why licensing is so important. It will give a boost to skilled practitioners and introduce accountability.

I am working hard to achieve the certainty you need around restricted building so that you can be confident about the work you do in future.

I don’t need convincing about its benefits.

It will promote consumer confidence by allowing the public the chance to hire a competent practitioner.

It will lift the performance of the sector, set standards and introduce accountability.

I recognise its importance and I am actively working with colleagues to ensure that we have a streamlined licensing scheme, and that the scope of restricted building work targets the right mix of critical building work.

What other areas of the Building Act is the Government looking at?

The government is llooking at what really needs to be consented and whether there are opportunities to exempt low-risk work from the need for consent. 

Looking ahead, I would like to recognise licensed building practitioners, by allowing them to do some work without consent.

We will be providing better information and education on the building code and how to achieve or meet performance standards without “regulating everything that moves”.

We will remove unnecessary building control regulation and increase focus on information and education.

We will support councils to work smarter using technology to do so.

Leveraging the same technology to reduce design and building costs – investigate the potential for an on-line national consenting system to reduce costs, and get consistency across the country.

Helping consumers make better, more informed decisions about building their homes and choosing the products they need

Reform is already underway in the shape of the Building Amendment Bill (2) and the Resource Management Amendment Bill, both currently before Parliament.

The Building Amendment Bill

This bill will:

• Streamline the consent process for house designs to be replicated on a substantial scale and streamline the process for making minor alterations to work already consented.


• Make obtaining a Project Information Memorandum (PIM) voluntary which will save time and lower building costs.

The Bill has some useful initiatives, but it is only a start and doesn’t go far enough to address compliance issues facing homeowners, developers, and builders.  There’s more to be done.

Resource Management (simplifying and streamlining) Amendment Bill

This bill will cut through suffocating red tape for Kiwi homeowners, businesses and farmers while safeguarding the environment.

These reforms address the costs, delays and uncertainties of the current Act.

They will remove slow and overly bureaucratic processes that do little for growth or the environment.

Other key priorities:

Getting more leaky homes fixed.

The Government is looking at an alternative approach to weather tightness with greater emphasis on getting homes fixed - less on process - and more on outcomes.

I have directed the Department of Building and Housing to undertake a comprehensive review of the approach currently taken on weather tight issues as early indications are that improvements are needed.

Re-assessing risk and liability

Councils have taken a lot of the blame for the leaky homes crisis. 

It’s time to look at the issue of the allocation of risk in relation to who carries what risk, and how this is managed.

The current joint and several liability regimes drive risk-adverse behaviour by councils because too often they are the last man standing.

Developers and builders need to stand behind their work and put things right where needed.

I have asked my officials to prepare advice on:

• Whether various parties are currently bearing an appropriate level of risk.


• Whether territorial authorities are bearing too much risk, and whether some developers and builders are bearing too little, given their ability to use shelf company structures.


• What is a reasonable level of risk for consumers to bear? Whether we can improve consumers’ access to good information and advice, so they can make good decisions when buying or building a property.


• Whether consumers would benefit from access to a greater range of options and products for managing risk such as home warranty insurance products.

And finally, I want to tell you about a new initiative which I am very excited about.

Starter Homes Design Competition

The Starter Homes Design Competition is an example of how innovative affordable homes can be a realistic option for New Zealanders.

It was organised by the Department of Building and Housing and aimed to encourage architects, designers, and those in the building industry, to come up with innovative and affordable solutions which would show what can be achieved with limited resources.

The winners of the competition were announced earlier this month at a special ceremony in the Beehive.

The wonderful designs showed that a range of functional and practical living spaces can be incorporated into an innovative design that meets people’s needs and provide a quality living environment.

It essentially promotes simplification, standardisation, and appropriate choice of house sizes.  It basically means that sound building practice and affordability doesn’t always have to mean boring or unappealing.

Modest homes can be exciting and can capture our imagination.

The ideas generated by the competition will feed in to the Compliance Document for Simple Homes and we are actively looking at ways to promote the scheme so watch this space!

Conclusion

As you have heard, a lot is happening.  The measures I have outlined will bring benefits to you and your businesses.

The recovery will come and you need to be prepared for when it does.  I want to help you prepare.  The Government can remove barriers and help you take new opportunities.

The starter home initiative may be one. But there will be others.  I want to see you succeed.  I and my Department will continue to work to ensure that that happens.

Thank you for inviting to speak today and I look forward to updating you on progress again next year.

Thank you.